HL Deb 21 March 1991 vol 527 cc724-9

3.19 p.m.

The Lord Chancellor

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved. That the House do now again resolve itself into Committee.—(The Lord Chancellor.)

On Question, Motion agreed to.

House in Committee accordingly.


Lord Carter moved Amendment No. 107:

After Clause 26, insert the following new clause: ("Maintenance collection

.—(1) This section applies where any person ("the liable person ") is liable to make payments of child support maintenance. (2) The Secretary of State may order that maintenance will he collected in like manner as income tax in order to secure the payment of any amount due from a liable person under the maintenance assessment in question. (3) Maintenance may be collected in like manner as income tax so as to secure the payment of—

  1. (a) arrears of child support maintenance payable under the assessment;
  2. (b) amounts of child support maintenance which will become due under the assessment; or
  3. (c) both such arrears and such future amounts. ").

The noble Lord said: In moving Amendment No. 107, I shall speak also to Amendment No. 130. This amendment deals with the best way in which to enforce the collection of maintenance. As we know, the proposed child support agency will have the power to collect maintenance on behalf of the custodial parent, and to require deduction from earnings where appropriate. Also, if there are arrears, the child support agency has various powers of enforcement.

We are anxious because we believe that there may be problems with the enforcement of collection. Deduction from earnings orders could be evaded by change of employment and there is the problem of ensuring payment from those who are self-employed. Therefore, we do not believe that such orders are the appropriate measure to use.

Perhaps a better way to enforce effective collection would be by use of the Inland Revenue's resources. There is an old saying in farming that only three things in life are certain: death, Quarter Day and taxation. We should like to take advantage of that.

As we know, the Inland Revenue has to trace people for taxation purposes and it would be possible to enforce collection through the changing of tax codes. That would make it harder for liable persons to avoid payment through change of employment if they are on the PAYE system.

The anxiety we have is whether the child support agency, which is based in the Department of Social Security, will have sufficient experience to perform effectively and adequately its enforcement role. If not, the result will be that many one-parent families will be no better off.

The simplest, the most cost-effective and reliable means of enforcing collection would be to use the resources of the Inland Revenue because of the possible ineffectiveness of the enforcement measures in the Bill.

Amendment No. 130 is technical and makes the necessary changes in the Bill to enable the enforcement powers to be given to the Inland Revenue. I beg to move.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

It may be worthwhile taking time to explain, first, why we believe that the child support agency is the better agency to enforce the collection of maintenance; and, secondly, to set out the problems which we see in the noble Lord's amendment which attempts to shift responsibility for collection on to the Inland Revenue. I assure the noble Lord that in framing these proposals, we considered carefully and fully a number of different ways in which maintenance could be collected and who should be charged with that collection.

As the Committee will know, the Government's proposal to create a child support agency (CSA) will place the responsibility for all stages of child maintenance, in most cases, on a single body. The CSA will be a purpose—built organisation with its own independent identity, and dedicated to one purpose—that is, providing an effective and efficient service in tracing absent parents and assessing, reviewing. collecting and enforcing child maintenance payments, and offering advice and information. The provision of the quality of service which children and their families are entitled to expect will generate very substantial volumes of activity. It is estimated that, when it is fully up and running, the CSA will have some 2 million customers and will make around 3 million assessments every year.

The CSA will be accountable to Parliament through my right honourable friend the Secretary of State for Social Security. As I am sure noble Lords are aware, the department deals with people from all walks of life on a day-to-day basis—from payment of child benefit to nearly 7 million families for over 12 million children, through collection of national insurance contributions for 58 million accounts, to paying retirement pension to over 10 million pensioners. It is therefore highly experienced in dealing with complex questions relating to people's incomes.

It makes sense for responsibility for the CSA's work on child maintenance to lie with the Secretary of State for Social Security. Three quarters of lone parents receive a social security benefit (either income support or family credit). Some 855,000 lone parents receive income support. Furthermore, the DSS already has considerable experience in dealing with maintenance matters. It arranges for voluntary payments of maintenance to be made to over half of the lone parents on income support who are receiving maintenance. The DSS also collects maintenance for one quarter of the lone parents on income support who receive maintenance. Two thousand five hundred posts are already allocated to this work within DSS, and it is important that the CSA should be able to build on this foundation. It will employ some 4,700 staff in all, specially trained to deal with all aspects of child maintenance.

I turn now to the Inland Revenue which is the subject of the noble Lord's amendment. The Revenue —with its well-tried PAYE system for the collection of income tax from employees —was a possible candidate. But the PAYE system is concerned with the collection of tax and, under separate social security regulations, with the collection of another duty, national insurance contributions. It is not designed or intended for the general discharge of liabilities or the collection of debts. And the Board of Inland Revenue is charged, under the Taxes Management Act, with the care and maintenance of the tax system. Maintenance payments are not a tax. It would be both impractical and inappropriate for the Revenue to be involved in their assessment or collection.

There are many very serious practical difficulties involved in trying to adapt to this task a system designed to a much more limited end. The PAYE system is aimed at collecting the income tax due on their wages and salaries from employees as efficiently as possible while ensuring that the confidentiality of their tax affairs is maintained and the compliance burden on their employers is minimised.

Tax is deducted by employers from earnings by reference to tax tables and a PAYE code for each employee. Tax is recovered on subsidiary income or chargeable benefits by an adjustment to the code. The PAYE code number effectively prevents a portion of income being subjected to tax. By reducing the coding, the amount deducted by the employer increases.

The positive element in most taxpayers' coding is limited to their personal allowance. This already causes problems in cases where there are significant benefits to be assessed. The tax code would simply not be large enough to cover maintenance payments.

The introduction of a new and separate element such as maintenance would require the redesign of accounting systems, of many of the forms used internally and externally and of employers' manual and computerised payroll systems. Any system which complicates PAYE would be opposed by employers' representatives. Larger organisations would have to change their computer programmes. Smaller ones will have to spend more of their own or their employee's time.

I have sought to explain why we believe it sensible that the new arrangements for collecting and enforcing child maintenance should be brought together in the agency as a responsibility of my right honourable friend the Secretary of State for Social Security. I have outlined also why we do not think it right that the Inland Revenue should be used for those purposes which would give it a role which is well outside its proper scope and functions. In the light of that explanation, I hope that the noble Lord will withdraw his amendment.

Lord Carter

I am grateful to the Minister, but I am not sure that he has convinced me. For example, he mentioned the experience of the DSS in the administration of the social fund. The DSS spends no less than 31 per cent. of the total expenditure on the fund in administering it. However, I have tabled a Question on that issue. That is to be raised next Thursday and the matter can be dealt with at that time. In passing, it is not the case that the DSS is wholly effective in all the matters with which it deals.

I understand the point which the noble Lord makes about the PAYE system. I was amused when he spoke about the complications caused to computer systems.

I do not know whether the noble Lord has been watching the news in the last couple of days. If so, he will have seen the complications and wastage of time and money which has arisen in local authority offices as regards the alteration of computer systems.

As someone who has worked with the PAYE system, I am not convinced that that system could not be used. We are talking about the effectiveness of collection and attempting to collect the money as effectively as possible. We wish to ensure that the collection can be effectively enforced. There is anxiety about the CSA and how it will work. The PAYE system is already in existence and we believe that it could be adapted for these purposes. Therefore, I shall ask the opinion of the Committee on the matter.

3.30 p.m.

On Question, Whether the said amendment (No. 107) shall be agreed to?

Their Lordships divided: Contents, 68; Not-Contents.111.

Division No. 1
Ardwick, L. John-Mackie, L.
Attlee, E. Kilbracken, L.
Aylestone, L. Lawrence, L.
Birk, B. Leatherland, L.
Blackstone, B. Listowel, E.
Blease, L. Llewelyn-Davies of Hastoe, B.
Boston of Faversham, L. Longford, E.
Bottomley, L. Macaulay of Bragar, L.
Brightman, L. McIntosh of Haringey, L.
Broadbridge, L. Milner of Leeds, L.
Bruce of Donington, L. Molloy, L.
Campbell of Eskan, L. Monkswell, L.
Carmichael of Kelvingrove, L. Mulley, L.
Carter, L. Peston, L.
Castle of Blackburn, B. Phillips, B.
Cledwyn of Penrhos, L. Prys-Davies, L.
Clinton-Davis, L. Richard, L.
Cocks of Hartcliffe, L. Sainsbury, L.
David, B. Scanlon, L.
Dean of Beswick, L. Shannon, E.
Donaldson of Kingsbridge, L. Stallard, L.
Donoughue, L. Stedman, B.
Ennals, L. Stoddart of Swindon, L.
Fisher of Rednal, B. Strabolgi, L.
Gallacher, L. Tanlaw, L.
Graham of Edmonton, L.[Teller] Taylor of Blackburn, L.
Halsbury, E. Underhill, L.
Hatch of Lusby, L. Wallace of Coslany, L.
Hayter, L. Walston, L.
Hirshfield, L. White, B.
Hollis of Heigham, B.[Teller.] Williams of Elvel, L.
Hughes, L. Willis, L.
Jacques, L. Wilson of Rievaulx, L.
Jenkins of Putney, L. Winterbottom, L.
Aldington, L. Brougham and Vaux, L.
Alexander of Tunis, E. Butterworth, L.
Allenby of Megiddo, V. Caithness, E.
Allerton, L. Caldecote, V.
Alport, L. Campbell of Alloway, L.
Ampthill, L. Campbell of Croy, L.
Arran, E. Carnegy of Lour, B.
Belstead, L. Carnock, L.
Blatch, B. Cavendish of Furness, L.
Blyth, L. Colnbrook, L.
Boardman, L. Cottesloe, L.
Boyd-Carpenter, L. Cranbrook, E.
Brabazon of Tara, L. Cullen of Ashbourne, L.
Brigstocke, B. Dacre of Glanton, L.
Davidson, V. [Teller.] Mottistone, L.
De L'Isle, V. Mountevans, L.
Denham, L. Munster, E.
Dormer, L. Murton of Lindisfarne, L.
Downshire, M. Nelson, E.
Eccles, V. Norrie, L.
Ellenborough, L. Northesk, E.
Elliot of Harwood, B. Nugent of Guildford, L.
Elton, L. Orr-Ewing, L.
Faithfull, B. Oxfuird, V.
Ferrers, E. Park of Monmouth, B.
Flather, B. Pearson of Rannoch, L.
Flowers, L. Pender, L.
Fortescue, E. Peyton of Yeovil, L.
Fraser of Kilmorack, L. Rankeillour, L.
Gainford, L. Reay, L.
Gainsborough, E. Rees, L.
Gisboroughk, L. Renwick, L.
Gray of Contin, L. Richardson, L.
Gridley, L. Rodney, L.
Hailsham of Saint Marylebone, L. Sandyis, L.
Henley, L. Selkirk, E.
Hooper, B. Skelmersdale, L.
Skelmersdale, L. Howe, E.
Strange, B. Hylton-Foster, B.
Strathcarron. L. Ilchester, E.
Strathclyde, L. Jeffreys, L.
Strathmore and Kinghorne, E. Joseph, L.
Sudeley, L. Kimball, L.
Swinfen, L. Kinnaird, L.
Terrington, L. Knollys, V.
Teviot, L. Lauderdale, E.
Thomas of Gwydir, L. Lloyd of Hampstead, L.
Trumpington, B. Long, V. [Teller.]
Ullswater, V. Lyell, L.
Vaux of Harrowden, L. Mackay of Clashfern, L.
Waddington, L. Massereene and Ferrard, V.
Wade of Chorlton, L. Merrivale, L.
Warnock, B. Mersey, V.
Westbury, L. Monckton of Brenchley, V.
Wise, L. Montgomery of Alamein. V.
Wolfsonws, L. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

Lord Henley

This may be a suitable moment to take the Statement. I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

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